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Representative Thornberry has introduced a discussion draft of his proposed FY19 acquisition reform efforts. In it he proposes to separate the definition of "commercial item" into "commercial product" and "commercial service." The following is the proposed definition of "commercial product" (emphasis added below):

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§ 103. Commercial product

In this subtitle, the term ‘commercial product’ means any of the following:

‘‘(1) A product, other than real property, that— ‘‘(A) is of a type customarily used by the general public or by nongovernmental entities for purposes other than governmental purposes; and ‘‘(B) has been sold, leased, or licensed, or offered for sale, lease, or license, to the general public.

‘‘(2) A product that— ‘‘(A) evolved from a product described in paragraph (1) through advances in technology or performance; and ‘‘(B) is not yet available in the commercial marketplace but will be available in the commercial marketplace in time to satisfy the delivery requirements under a Federal Government solicitation.

‘‘(3) A product that would satisfy the criteria in paragraph (1) or (2) were it not for— ‘‘(A) modifications of a type customarily available in the commercial marketplace; or ‘‘(B) minor modifications made to meet Federal Government requirements.

‘‘(4) A product that— ‘‘(A) is produced in response to a Federal Government drawing or specification; and ‘‘(B) is ordinarily produced using customer drawings or specifications for the general public using the same workforce, plant, or equipment.

‘‘(5) Any combination of products meeting the requirements of paragraph (1), (2), (3), or (4) that are of a type customarily combined and sold in combination to the general public.

‘‘(6) A product, or combination of products, referred to in paragraphs (1) through (5), even though the product, or combination of products, is transferred between or among separate divisions, subsidiaries, or affiliates of a contractor.

‘‘(7) A nondevelopmental item if the procuring agency determines, in accordance with conditions in the Federal Acquisition Regulation, that— ‘‘(A) the product was developed exclusively at private expense; and ‘‘(B) has been sold in substantial quantities, on a competitive basis, to multiple State and local governments or to multiple foreign governments.

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To me this is saying that if a product is custom made in the commercial world, and the government wants that product customized for government use, it will qualify as a commercial product. Think air filters for trucks. Generally, they are unique to each make of truck in the commercial market place. If the government wants to buy an air filter for a five ton dump truck using government specs, the air filter would be considered a commercial product.

‘‘(4)﻿ A product that— ‘‘(A) is produced in response to a Federal Government drawing or specification; and ‘‘(B) is ordinarily produced using customer drawings or specifications for the general public using the same workforce, plant, or ﻿﻿equipment﻿﻿.

This seems to say that the government can consider supplies--that are made to government specifications--commercial products if those type/kind of products are ordinarily produced to non-governmental customer specifications and use the same workforce, plant, or equipment.

Conceptually, computers, automobiles, and real property* come to mind. These things are ordinarily made to customer specifications using the same workforce, plant, or equipment.

*I know that real property is not a commercial item under current rules

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Thornberry's idea is stupid, complex, and an example of legislative contortionism. What is he going to have a commercial item referee to figure out what is what. Look at this one.

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‘(7) A nondevelopmental item if the procuring agency determines, in accordance with conditions in the Federal Acquisition Regulation, that— ‘‘(A) the product was developed exclusively at private expense; and ‘‘(B) has been sold in substantial quantities, on a competitive basis, to multiple State and local governments or to multiple foreign governments.﻿

If we get rid of the crap before "(A), it seems like an item bought by more than one government is commercial. Since when do multiple governments' purchases determine what is commercial.

Maybe we can start here: A commercial product is one that is available from amazon.com or a similar online retailer. A commercial service is one that is availailable from the yellow pages. Any contract specialist can determine what is a commercial item with a few clicks of the mouse.

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Guest Vern Edwards

Guest Vern Edwards

"Commercial product" means anything other than real property that is or has been offered for sale to the general public in standard or customized form.

"General public" means individual citizens, nongovernmental organizations, and businesses whose annual sales to the Department of Defense, the NSA, and the CIA are less than 15 percent of their total annual revenue.

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The meaning of number 4 IS the current meaning and intent of the definition of commercial item already present. Read the current definition, think "modification" OR "minor modification". Then think "Any combination of items".

Ad lib - I was proud to call Don Tucker of Tektronix history a friend and mentor. Don was a member of the late 1980's and early 1990's Commercial Products Acquisition Team an industry group who's work was the catalyst to the current FAR Part 12 and by my memory their effort was to accomplish exactly what Thornberry is now trying to screw up. No more plans and specs for a dang oscilloscope just buy what Tektronix makes have them paint it green and change the knobs to black, it will do everything you want government!!!!!!!

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Guest Vern Edwards

Guest Vern Edwards

Over time the government created a lot of rules designed to protect the taxpayers and foster certain public interests and political objectives. Those rules made government contracting unattractive to many commercial suppliers, and failure or inability to use products like Tektronix oscilloscopes made oscilloscopes more costly to the government and denied government the benefits of commercial developments. So Congress enacted FASA and the commercial item rules in order to make it easier and even unavoidable to buy commercial.

But as soon as you label a firm's product or service commercial you let them off the hook for many rules that are important to various groups. So complex definitions and systems of exemption are developed by attorneys and other bureaucrats to close loopholes and let only the good guys through. Of course, the more complex the definition the more attorneys and bureaucrats have to argue about. What do you mean by "customarily used by the general public"? What constitutes customary use and who is the general public?

When it comes to satisfying government objectives and concerns, it's very, very hard to write a rule that will make everyone happy and that no one will abuse.

Guest Vern Edwards

Guest Vern Edwards

There are many companies that provide manufacturing services. The customer designs something and hires a company to manufacture it. What paragraph (4) is saying is that an acquisition of such a product will be treated as an acquisition of a commercial product.

Example? Practice bombs. When I was with the SBA I handled an 8(a) company that manufactured things for the government on order. One of their biggest contracts was for practice bombs for the Air Force. All they did was manufacture them to government spec.

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There are many companies that provide manufacturing services. The customer designs something and hires a company to manufacture it. What paragraph (4) is saying is that an acquisition of such a product will be treated as an acquisition of a commercial product.

Example? Practice bombs. When I was with the SBA I handled an 8(a) company that manufactured things for the government on order. One of their biggest contracts was for practice bombs for the Air Force. All they did was manufacture them to government spec.

Vern - Just wondering as I follow this discussion. The draft language includes "and ‘‘(B) is ordinarily produced using customer drawings or specifications for the general public using the same workforce, plant, or equipment." I am wondering if the practice bomb example works? Applying the proposed definition the firm would also have to manufacture practice bombs ordinarily for the general public.

Seems different than say a firm that manufacturers box wrench's for general public and then only manufacturers practice bombs for the government. Does not fit the definition to make the bombs a commercial item by my read. Or in other words the read of the proposed language makes the item commercial only if the firm manufacturers the same thing on a custom basis that is sold to the general public and also then manufactured to custom needs of the government. My mind goes to something like a pole barn, manufactured home, the other examples like vehicles already mentioned and then to ships and jets.

How about an option - everything is commercial item and tweak when certified cost or pricing data applies to any procurement, dollar threshold and what is being provided not whether it is commercial item or not? Or is this an old idea that is a non-starter?

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Guest Vern Edwards

Guest Vern Edwards

@C CulhamBy the way, it just dawned on me that (4) would cover C-130J aircraft. When Darleen Druyun declared them commercial items, John McCain had a conniption. But under Thornberry's definition of commercial items, it would be okay.

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In addition to C-130Js, I think satellites might fit the definition. I know some defense contractors use the same satellite bus (and facilities and presumably workforce...though they only need one of the three under the (4) definition) for commercial satellites and DoD satellites - the only difference between the two satellites/“products” are the specifications.

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Guest Vern Edwards

Guest Vern Edwards

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@C CulhamBy the way, it just dawned on me that (4) would cover C-130J aircraft. When Darleen Druyun declared them commercial items, John McCain had a conniption. But under Thornberry's definition of commercial items, it would be okay.

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Thank you Vern. Yours and Matthew's thoughts took me to the National Drug Code, ISO and beyond. My conclusion, some one needs to ask Thornberry (and probably the House Armed Services Committee) what "leg up" is the intended language suppose to provide that the current definition does not?

Despite [past reform] efforts, commercial buying has not become as widespread in DoD as Congress had hoped. Only 18 percent of DoD’s total obligations in FY 2017 were for the acquisition of commercial items, and commercial item spending actually declined by 29 percent between FY 2012 and FY 2017. Congress has continued to enact changes to commercial policies, and DoD has continued to evolve its policies, training, and tools; however, the commercial marketplace is evolving at a much faster rate. DoD’s commercial buying practices require a comprehensive reevaluation to fulfill the promise offered by FASA 24 years ago.

DoD’s commercial buying has stagnated for multiple reasons. The acquisition workforce has faced issues with inconsistent interpretations of policy, confusion over how to identify eligible commercial products and services, and determining that prices are fair and reasonable. DoD contracting officers have received increasing criticism and oversight from both the DoD Inspector General (IG) and the Government Accountability Office (GAO). This confusion has resulted in frequent promulgation of legislative revisions as Congress seeks ways to encourage DoD to access the commercial marketplace, as well as agency‐level policy and local guidance intended to improve the workforce’s ability to buy commercially.

The FAR has been amended more than 100 times to address various aspects of commercial buying, making commercial buying policies more difficult to navigate. The majority of FAR amendments related to commercial buying policy were administrative in nature, although others were driven by statute and agency‐level policy related to contract type, the applicability of various statutes, and pricing. Since FASAwas implemented, the number of DoD-related commercial buying provisions and clauses has increased by 188 percent, andthe number of commercial clauses that may be flowed down has increased five‐fold. In 1995, the FAR and DFARS contained a combined total of 57 government clauses applicable to commercial items. Today there are 165 clauses, with 122 originating in statute, 20 originating in executive orders, and 23 originating in agency‐level policies.

While contracts for construction of real property are generally not considered commercial items or commercial services, the use of Federal Specifications, Mil-Specs and Mil-Standards to specify construction materials, installed equipment, tests and prescriPtive construction procedures has greatly diminished over the past 20 years. Commercial product specifications, commercial standards and construction specifications have vastly improved and proliferated over this time period.

I am certain that the decreased use of Mil and Federal product specs is a result of the emphasis placed upon using “commercial items”.